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Another missed opportunity to build wealth

For almost a year now, I've been discussing the situation of Detroit with African American people I know who are in the real estate industry. Detroit is a prime location to build up industry, homes and international trade AND much of it is on the auction block for sale. Its been on sale for almost two years now. This recent story caught my attention. Banks are buying up Detroit because they see the value in its location and it potential as an investment.

Detroit house auction flops for urban wasteland

DETROIT (Reuters) – In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded.

After five hours of calling out a drumbeat of "no bid" for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag.

"OK," he said. "We only have 300 more pages to go."

There was tired laughter from investors ready to roll the dice on a city that has become a symbol of the collapse of the U.S. auto industry, pressures on the industrial middle-class and intractable problems for the urban poor.

On the auction block in Detroit: almost 9,000 homes and lots in various states of abandonment and decay from the tidy owner-occupied to the burned-out shell claimed by squatters.

Taken together, the properties seized by tax collectors for arrears and put up for sale last week represented an area the size of New York's Central Park. Total vacant land in Detroit now occupies an area almost the size of Boston, according to a Detroit Free Press estimate.

The tax foreclosure auction by Wayne County authorities also stood as one of the most ambitious one-stop attempts to sell off urban property since the real-estate market collapse.

Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days.

The county had no estimate of how much was raised by the auction, a second attempt to sell property that had failed to find buyers for the full amount of back taxes in September.

The unsold parcels add to an expanding ghost town within the once-vibrant town known worldwide as the Motor City.

Critics say the poor showing at the auction underscores the limits of using a market-based system to clean up property tax problems. They say the system has enriched a few but failed to deliver a way for Detroit to staunch its dwindling population and could worsen the vacancy crisis.

One proposed alternative would have officials take control of the tax foreclosure process through a land bank program of the kind being used to revitalize the nearby city of Flint.

The stakes in the debate are rising.

The number of Detroit properties in tax foreclosure has more than tripled since 2007 and seems certain to rise further. The lots for sale last week represented arrears from only 2006, well before the worst of the downturn for U.S. automakers.

"We have to keep in mind that GM and Chrysler filed for bankruptcy this year," said Terrance Keith, chief deputy treasurer of Wayne County. "Some people are going to be totally tapped out next year."

Detroit, already stuck with a $300 million budget deficit, is responsible in the meantime for cutting the weeds and responding to fire calls for thousands more abandoned lots.


Many potential homeowners that Detroit desperately needs said they felt penalized by the auction process.

They mostly found themselves outbid by deeper-pocketed investors from California and New York who were in a race to claim the auction book's relatively few livable properties.

Dozens of potential bidders, mostly local residents, were turned away on the first day of the auction by deputies after they failed to meet the morning deadline for registration.

Ross Wallace, a lieutenant in the U.S. Army, turned in his check for $500 and waited on the auction floor in full dress uniform for a chance to buy a Detroit house on the cheap.

Wallace, 27, said he did not want to leave his fiancee and two children with a mortgage before shipping out to Iraq later this year.

"I still have student loans and I'm trying to be responsible. I don't want to leave debt," he said.

Wallace waited for the auction to roll around to Detroit's Boston-Edison district, a once stately area that was home to boxing legend Joe Louis and Motown founder Berry Gordy.

But he was quickly outbid. An unidentified investor at the front of the room who had scooped up several dozen properties took the home Wallace wanted for about $15,000.

"Why am I competing against a bank?" he said later. "It would be common sense to have a separate process for people who want to move back to the city or it's going to stay empty."

Nearby, a Dutch-born local woman, Riet Schumack, 54, knitted patiently through the auction for a chance to bid on a lot in Brightmoor, one of the most blighted neighborhoods.

Schumack, who runs a community garden near her home that employs 14 neighborhood children, said she had been battling through a maze of bureaucracy for years to try to buy an abandoned lot nearby to expand and plant fruit trees.

She learned the lot had been taken back from its previous owner -- an absentee investor with more than 100 abandoned lots in Brightmoor -- only because of her constant calls to city and county officials, she said.

When officials told her she would have to wait for a fourth day to bid on the property, Schumack broke down into tears.

"Anybody with a job is not able to sit here for days. So you are left with the sharks," she said.

Opinions were divided on whether the investors buying lots and homes by the dozen were a sign of better times ahead.

"They weren't here two years ago. So why are they here now? Unless, as speculators, they believe this is the bottom," said Keith of the Wayne County treasurer's office.

Bill Frank, a Detroit realtor trying to buy a small house for a just-married friend, found himself repeatedly outbid.

"Speculators are often not good for a city and, from my experience, they are going to lose a fortune," he said. "But there are no easy answers. It's a declining city."

(Editing by Peter Bohan and John O'Callaghan)
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I've been looking into this as well and when I saw this article yesterday, I thought it was odd that "big business" was given preference again.

I have relatives in the Detroit area and this may be a good opportunity to do some good.

I also read an article where it says China was investing heavily in Detroit since things were so dirt cheap.
Detroit’s primary problem is that its image is born from the perceptions of whites, but for African Americans, you will find much to like about the City. The Detroit area has suffered self deprecation for years, mainly the resultant of suburban whites who seemed to salivate in glee at the problems of the black majority and run city. Suburban whites bragged about not having gone into the city for years and would tell anyone who would listen that they should NEVER go into the city if they valued their lives. That is why the Lions and especially the Pistons moved from the City to the suburbs, along most retail.

Now, I think many whites have realized, especially business community and the young, that if the image and perceptions of an areas principle city is negative, then such negatively impacts the suburbs as well. Business located in the suburbs cannot recruit talent from around the country because of the perceptions of the City of Detroit proper. Thus, over the last 10 or 15 years, there has been a major push for relocation of businesses the suburbs back to the City. Rock Finical (Quicken Loans) is the latest who is planning a relocation of their 4,000 workers to downtown from the suburb. In other words, things are actually turning around in the area but it is being masked by the current economic crisis.

So in short, I agree that Detroit is a good LONG TERM investment. However, blacks tend to be behind the curve in recognizing shifts and changes. Blacks in Detroit now are chasing the suburban dream, because for the longest blacks were kind of intimidated away from moving into many suburbs. Now things have lessened in regards to suburban resistance and massive numbers of blacks are fleeing the city for the suburbs, when really the place to be in the future, in any large metropolitan area, is the city. That is because transportation cost will become so high, from the price of gas, that the most cost effective and economical place for people and business is to be centrally located in a high density area that is conducive for public transportation.

All that said, the American economy is going to resume it collapse and personally I would not be thinking of such investments in city living, regardless of the city. My thing is that it is best to own about 10 acres out in the country somewhere. If people have money to invest, that is where I would be investing. I think Detroit has great POST COLLAPSE opportunities, as the nation is forced to reinvent itself and economy. However, before then I don’t see any city living as a good investment. Think Rural.
Read your link on this and I keep thinking that this was discussed in PowerNomics. In the thread here started by LieDecryptor and in the book. As it was pointed out in the intial thread, Detroit is an ideal place for international trade and business mainly because its a port city, like New Orleans. What are your thoughts on that Noah?
Originally posted by Yemaya:
Read your link on this and I keep thinking that this was discussed in PowerNomics. In the thread here started by LieDecryptor and in the book. As it was pointed out in the intial thread, Detroit is an ideal place for international trade and business mainly because its a port city, like New Orleans. What are your thoughts on that Noah?

Not to mention, I heard on CBS News, some of the ex-auto workers are getting employed to make sets for TV sitcoms, that are moving their productions to Detroit, because it's more cheaper there than Hollywood.
Detroit is an ideal location for trade because the US largest trading partner in the world is Canada and Detroit borders the City of Windsor, Ontario Canada, separated only by the Detroit River. Although I have not heard any news lately, there is a “Second” bridge (the other is the Ambassador Bridge currently in use) linking Detroit and Windsor (there is also a tunnel that goes under the river to the other side) that is to be built. It’s supposed to create 25,000 jobs (split between the two countries I would guess) and take several years to complete. Its Joint US and Canadian project, but it will revitalize SW Detroit.

Michigan in General is in good shape from being surrounded by the largest fresh water supply in the world, in the form of the Great Lakes. Fresh water, which has been taken for granted for years, will become a scarce resource due to population growth and building major metropolitan areas in places that really don’t have the water to support it. For example, from the aquifers and reservoirs indigenous to metropolitan LA, it could only support 4 million people; however, the area has 18 million. It pumps in water from other places but soon these places will grow and they will need to keep their own water. Even Atlanta, Georgia nearly ran out of water and Florida is full of sink holes from depleted water tables.

Detroit is a tough sell because it is nearly 90% black and that intimidates whites. Whites want to be able to control the city and they don’t want to be paying taxes in the city if they cannot control the government. Well, with a city 90% black, it will take a huge influx of whites before they can get the type of numbers to influence the politics of the city. Unfortunately, the truth is that cities don’t turn around until you get the white investment and gentrification. Now, I wish more affluent blacks would choose to gentrify as opposed to suburbanize, but that is simply not reality. Its whites who have turned around the fortune of cities….but we could do it to in theory.
Yemaya you are correct, this subject is covered in my thread and in PowerNomics... one of the main problems in a situation like Detroit is the complete ineptitude of the so-called "leadership" there to even recognize that Blacks are the MAJORITY and start acting like it. To illustrate the totally antiquated and backward mentalities that many "Black Leaders" still have in their never ending quest to be "integrated"... at one point in PowerNomics Dr. Anderson mentions an experience he had while visiting Detroit he said that while there the majority Black city council wanted to give him recognition and a trophy for his work. He said before he accepted it he wanted them to answer a question which was "What are you doing for Blacks in this city specifically?"...Their answer "We have an office of minority businesses" He said you mean you have an office of minority business to serve Blacks and the city is 84% Black? They replied "yes"...He told them that's the first office they needed to SHUT DOWN because you are NOT a minority in this city you are the MAJORITY.

The point being, Detroit is a classic example or what's wrong in Black America (particularly it's current "leadership") They are so used to trying to fit into other peoples communities as a minority that they cannot even recognize it when they are the MAJORITY and start acting like it. In the city of Detroit you have an apartheid type scenario whereby you have a majority Black population acting like it's the minority and a minority white population (3% in Detroit Metro area) acting like it's the majority. 97% of the contracts and other business opportunities go to that minority 3% white populace while the remaining 3% goes to the MAJORITY Black populace in the form of a "minority business" set aside. This is COMPLETE and UTTER MADNESS...any so-called Black leadership that permits this type of disparity on it's watch should be tossed out on it's head by the MAJORITY Black populace which it calls itself "serving".

This is a prime example as to why I feel that politics is NOT the answer for Blacks in this country because once blacks get into positions of power under this current socio-economic construct... all they do is function as figure heads that serve as appeasement tools to the larger Black community by just giving them symbols of "Black Power" with little or no SUBSTANCE. All across this country you have Blacks in positions of power yet they never specifically target the Black community (who need it most) with initiatives. It's always wrapped and bundled in with other things such as ambiguous programs to "fight poverty" or as in the case of Detroit "minority programs". The Black leadership in this country functions the same way it does when puppet dictators are set up in African countries...the status quo in urban centers across this country are nothing more than examples of neo-colonialism.

I'm going to be speaking at a Black organization this weekend and I will definitely mention whats going on in Detroit and how Blacks can start using these types of crisis' as an opportunity to redefine themselves and kick these current inept so-called leaders to the curb. I also came across the other parts to Claud Anderson's PowerNomics speech that I didn't include in my " The Real Economic State Of Black America" Thread...I will be posting the other parts in the A.B.O.S.E.R.T. thread soon.

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